Oracle warns it might not pay data center lease
Niv Bavarsky
Oracle is acting like your defiant roommate who said he won’t pay rent until the toilet is fixed. The company warned the developer of a massive New Mexico AI data center that it’ll delay contract payments if the project doesn’t come online as planned by 2028, Bloomberg reported yesterday.
The development, dubbed Project Jupiter, faces delays as permits for a natural gas pipeline to fuel the data center are in limbo amid local opposition. Oracle, which is the data center’s main tenant, invoked a force majeure contract clause that protects it from liability if certain events it can’t control occur—though it said it’s still committed to the project.
Oracle sees a murky future
The news adds uncertainty to the gargantuan enterprise, which hinges largely on Oracle paying up:
- The $18 billion of debt tied to the project is already trading at 90 cents on the dollar amid concerns that Oracle is too debt-burdened, per a recent Financial Times report.
- Oracle’s stock was down nearly 3.5% yesterday, while shares of its developer, Blue Owl Capital, sagged 3.6%.
This is bigger than Jupiter: The project is part of the Stargate initiative to spend $500 billion building data centers for OpenAI, which President Trump touted alongside the leaders of OpenAI and Oracle last year. Silicon Valley’s overall AI infrastructure splurge is projected to make up 3.6% of US GDP between 2025 and 2032.